Transition Alternative to Job Hunting

Leaving the military and entering the current job market is scary enough. Consider starting a business as instead of job hunting as a transition alternative. Veterans like Morris and Rector have lots of company in the franchise field. There are approximately 500,000 franchises in the United States, and veterans own nearly 14% of them, according to a 2011 report from PricewaterhouseCoopers and the International Franchise Association trade group. Those 66,000 veteran-owned franchises collectively bring in $139 billion in annual revenue.

Those numbers could soon go up. Last November, the franchise industry committed to recruiting 75,000 veterans and 5,000 wounded warriors as franchise owners and employees by the end of 2014. The industry is also pushing Congress for the passage of the Help Veterans Own Franchises Act, which would give veterans a 25% tax credit on their initial franchise fee.

Franchisors say they’re eager to attract more veterans because service members often have the qualities they seek out in business owners. “Many people in the military are used to following systems; they thrive in that. The franchisor has made the process replicable and looks for people who can learn to follow systems,” says Brian Miller, president of The Entrepreneur’s Source, a Southbury, Conn.-based company that acts as a broker for some 200 franchisors.

But for those considering taking the plunge, it pays to proceed cautiously. Buying a franchise is merely a structured way of starting a business — and not all structures are equal. Franchisors vary in their quality and their success rates. And it’s not cheap: Although costs vary widely, owners can expect to invest some $50,000 to $100,000 in cash and loans for home-based businesses and $200,000 to $300,000 for storefront ones, says Tony Capuano, an Ocean City, Md.-based franchisee of The Entrepreneur’s Source, which coaches new franchisees and business owners. Franchisees usually have to fork over a percentage of their revenues to the home office, a surcharge that eats into profit margins.